伯克希尔首席执行长兼董事长巴菲特周三发表声明说，今年1月他们最开始讨论收购交易时，索科尔曾对巴菲特说他自己持有化学公司Lubrizol Corp.的股票。巴菲特说，大卫和我都没觉得他买Lubrizol股票有任何违法的地方，这不是他决定辞职的原因。
巴菲特说，去年12月14日，索科尔买了2,300股Lubrizol股票，接着在12月21日卖掉了。之后，索科尔又在今年1月初买了96,060股，买盘价格不到每股104美元。
伯克希尔3月14日说，已经同意斥资90亿美元收购Lubrizol，相当于每股135美元。
巴菲特在声明中说，大卫买入Lubrizol股票是在他和我讨论收购事宜之前，他当时并不知道我对他的建议可能有什么反应。巴菲特说，他是在3月19日亚洲之行前不久得知买进股票的规模的。
此事对现年80岁的巴菲特也可能是沉重一击。巴菲特在选择管理人士时强调人品和正直。他本人就以极高的操守而知名。美国最大的公司之一伯克希尔的股价在盘后交易中大幅下跌。
一 份上周提交给监管机构的备案文件详细叙述了收购Lubrizol的交易。文件显示，索科尔确定Lubrizol是一个可能的收购目标，并牵头初步收购谈 判。据备案文件说，索科尔从一份包括18家化学公司的名单中选中了Lubrizol，这份名单是花旗环球金融有限公司(Citigroup Global Markets)的银行家们在2010年12月按照索科尔的要求编制的一份潜在收购项目名单。
今年1月，索科尔与Lubrizol首席 执行长汉布里克(James Hambrick)会面讨论了两家公司的公司文化，并告诉他伯克希尔提出的收购要约将视他是否同意继续留任首席执行长而定。备案文件说，在汉布里克及 Lubrizol董事会同意进行收购谈判之后，巴菲特才开始牵头。
巴菲特在声明中说，索科尔知道一旦他提出收购建议，自己就左右不了伯克希尔的决定了，我和（伯克希尔副董事长）芒格(Charlie Munger)将说了算，并且需获得伯克希尔董事会的批准，而大卫不是董事。
巴 菲特说，1月14日，我还给大卫发了一张便条，说明我对收购Lubrizol的质疑，以及我更倾向于收购另外一家有价值的公司，MidAmerican已 经对该公司提出了收购要约。在听取了大卫有关1月25日他与汉布里克晚餐谈话的汇报后，我才对收购Lubrizol产生了兴趣。
巴菲特说，近年来，索科尔还有两次曾经试图辞职。
索科尔辞职前担任伯克希尔旗下公共事业公司MidAmerican董事长，并且是提供部分所有权飞机的NetJets公司的董事长兼首席执行长。
巴菲特在周三的声明中说，索科尔做出了非凡的贡献，并以他在MidAmerican 和 NetJets的工作为例，巴菲特说如果没有伯克希尔雄厚资金的支持，NetJets曾注定要破产。
巴菲特说，MidAmerican首席执行长亚伯(Greg Abel)将兼任董事长。NetJets总裁汉塞尔(Jordan Hansell)将担任董事长兼首席执行长。
伯克希尔哈撒韦公司B股股价在消息宣布后的盘后交易中大跌。
ERIK HOLM
到底谁是索科尔？以下是巴菲特这位最出名的前雇员的介绍：
履历：
身 为伯克希尔旗下公用事业公司中美能源控股公司（MidAmerican Energy Holdings）的主席，索科尔经常作为“空降兵”为巴菲特“灭火”。他曾帮助陷入低迷的屋顶和保温材料公司佳斯迈威（Johns Manville）扭亏为盈；他也曾代表巴菲特对中国的电池厂商比亚迪做过尽职调查，巴菲特后来投资了这家公司。
五十多岁的索科尔也曾被引入伯克希尔旗下饱受亏损困扰的飞机租赁公司NetJets进行大刀阔斧的改革。索科尔大幅削减了债务和成本，减少了明星或雇员亲友免费搭乘公司飞机的次 数。在最近一次致伯克希尔股东的年度信中，当提到索科尔在NetJets的作用时，巴菲特说，索科尔在NetJets取得的成就的广度和重要性怎么说都不 为过。
来自巴菲特的正面评价：
巴菲特在2009年致投 资者的信中将索科尔称为“中美能源公司才华横溢的建造者和运营者”。谈及索科尔时，巴菲特是这样评价他的：“他的领导力一直给公司带来变化，债务已经减少 至14亿美元。在2009年遭受了令人吃惊的7.11亿美元的损失以后，该公司目前正在稳步实现盈利。”
巴菲特告诉《财富》（Fortune）杂志：索科尔一天之内做的事比我一周还多，我不是在跟你开玩笑。
值得拍成电影的幕后故事：
索 科尔的成长故事同巴菲特类似：在内布拉斯加州的奥马哈（Omaha）长大。孩童时代曾帮人送过报纸，也曾在一家小杂货店帮工。第一次看到尸体晕厥过去之 后，他放弃了成为一名医生的想法。上世纪90年代初期，索科尔帮助收购了一家地热企业，并成功将其转变为一家庞大的公用事业公司。中美能源公司去年创造了 113亿美元的收入，相比2009年略有下滑，约占伯克希尔公司2010年总收入的8%。
管理风格：
他分 给公司高管一本自己出版的129页的小书──《满意但不满足》（Pleased but Not Satisfied），书名道出了他的管理理念。在书中他说自己是按照被迫裁员时裁人的顺序给手下的每一位员工排列等第的。索科尔每天五点不到就起床，跑 上八公里，一周有五天要练习举重。
Shira Ovide
Buffett on Sokol
- MARCH 30, 2011, wall street journal
![[0330sokol4]](https://lh3.googleusercontent.com/blogger_img_proxy/AEn0k_tBZwHoSWkyqDuHnpAxpoKEdigrCPAPiHiETj-Xo8NvZPsEoUBKda788_aLLlMr6tWrVumnEP0D_-wKWBsG-ekJcANHMJhiGnpeDGBTWr16LSf93ZJkB119oDanaQTcOxh7NHEMhp3msH4HM-_xdVpsiw=s0-d "华尔街日报路透彭博：巴菲特头号接班人索科尔辞职")
David YellenDavid Sokol, left, and Warren Buffett.
Longtime Warren Buffett lieutenant and possible successor David Sokol resigned from his position at Berkshire Hathaway Wednesday. Take a look back at Mr. Buffett's comments about Mr. Sokol over the years.
“If I only had two draft picks out of American business, Walter Scott and David Sokol are the ones I would choose for this industry.” Mr. Buffett on Mr. Sokol when announcing Berkshire Hathaway's plan to buy MidAmerican in October 1999
“His leadership has been transforming: Debt has already been reduced to $1.4 billion, and, after suffering a staggering loss of $711 million in 2009, the company is now solidly profitable.” Mr. Buffett on Mr. Sokol's role at MidAmerican, in his letter to shareholders on 2009 performance
“He gets more done in a day than probably I get done in a week, and I'm not kidding.”Mr. Buffett on Mr. Sokol in an interview with Fortune magazine in August 2010
“I don't think there's a record that comes close to that of David at MidAmerican [in the utility industry].” Mr. Buffett on Mr. Sokol in a February 2010 interview
“I am proud of what has been accomplished for our society by Matt Rose at BNSF and by David Sokol and Greg Abel at MidAmerican. I am also both proud and grateful for what they have accomplished for Berkshire shareholders.” Mr. Buffett on Mr. Sokol's role at MidAmerican, in his annual letter to shareholders, Feb. 26, 2011
“I can't overstate the breadth and importance of Dave Sokol's achievements at this company” Mr. Buffett on Mr. Sokol's work at NetJets, in his annual letter to shareholders, Feb. 26, 2011
“Neither Dave nor I feel his Lubrizol purchases were in any way unlawful. He has told me that they were not a factor in his decision to resign.” Mr. Buffett on Mr. Sokol's resignation decision March 30, 2011
路透中国《热点透视》头号候选人意外辞职,巴菲特接班计划遭遇变数
(本文作者为热点透视专栏撰稿人,以下内容仅代表其个人观点)
撰稿 Agnes T. Crane 编译 许娜
路透纽约3月30日电---巴菲特(Warren Buffett)的接班计划遭遇重大变数.伯克希尔哈撒韦(Berkshire Hathaway)(BRKa.N: 行情)(BRKb.N: 行情)飞机租赁子公司NetJets首席执行官、被视为头号接班人的索科尔(David Sokol)意外辞职,使得寻找"奥马哈先知"巴菲特继位人选的工作面临两大障碍.首先,候选人必须是无可非议的.其次,他必须能抵制金钱诱惑.
直到今天之前,索科尔一直是众人仰慕的成功人士.巴菲特对他带领NetJets起死回生赞赏有加,外界也看好索科尔,认为他是头号接班人.索科尔曾向巴菲特推荐润滑剂制造商Lubrizol(LZ.N: 行情),成功说服他同意伯克希尔在两周前以97亿美元收购该公司,更让人觉得他是继承巴菲特衣钵的不二人选.
但人们後来发现,几乎就在索科尔向花旗(C.N: 行情)银行家表示伯克希尔或有意洽购Lubrizol的同时,他早已私下买进该公司的股票.虽然巴菲特和索科尔都认为这麽做并不违法,因为收购最後能否实现,索科尔并没有投票权.但根据信息披露,索科尔通过向巴菲特出售Lubrizol股票,赚得近300万美元.
不过,将巴菲特对索科尔购股交易的解释与Lubrizol在监管文件中对收购的说明相对照,便会发现许多问题没有得到回答.检察官或美国证券交易委员会 (SEC)是否认同巴菲特与索科尔的说法还有待观察.但如果说哪点可以肯定的话,那就是任何接替巴菲特的候选人都不能做出一丁点令人质疑的行为.
即使假设索科尔的行为是光明正大的,他的言论也表明,巴菲特培养接班人还面临另一道难题:钱.索科尔在辞职信中称,希望"利用馀下的职业生涯,通过创造持 久的股权价值,或创立一家能给後代带来机遇,并让自己有钱实现慈善理想的企业,来投资家族资源."换言之,他希望赚更多的钱.
不管怎样,Lubrizol事件可能还没完.在80岁的巴菲特及其董事会对接班人计划进行最後调整之际,不难料到他们可能会遇到气氛截然不同的讨论场合,因为届时很多律师会在场.(完)
--译文审校 白云
http://cn.reuters.com/article/cnMktNews/idCNnCN171302120110331Berkshire's Sokol Resigns as Buffett Discloses Top Deputy's Lubrizol Stake
Former Chairman of Berkshire Hathaway Inc.'s MidAmerican Energy Holdings Co. David Sokol. Photographer: Jonathan Fickies/Bloomberg
March 30 (Bloomberg) -- Paul Lountzis, founder of Lountzis Asset Management, and Charles Ortel, managing director at Newport Value Partners, talk about David Sokol's resignation from Berkshire Hathaway Inc. Sokol, one of Warren Buffett's top managers, stepped down after helping to negotiate the acquisition of a company whose shares he had purchased. Lountzis and Ortel speak with Julie Hyman on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
March 31 (Bloomberg) -- Jeffrey Matthews, founder of hedge fund Ram Partners LP and author of "Pilgrimage to Warren Buffett's Omaha," talks about the resignation of David Sokol from Berkshire Hathaway Inc. Sokol, once a candidate to succeed Warren Buffett as the head of Berkshire, resigned after helping to negotiate the acquisition of Lubrizol Corp., a company whose shares he had purchased. Matthew speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
David Sokol, once a candidate to succeed Warren Buffett as the head of Berkshire Hathaway Inc. (BRK/A), resigned as it was disclosed he helped negotiate a takeover while buying stock in the target company.
Sokol, 54, bought about 96,000 Lubrizol Corp. (LZ) shares in January before recommending the company as a takeover target, Buffett, Berkshire’s chairman and chief executive officer, said yesterday in a statement. Sokol had initiated confidential talks with Lubrizol the month before. Berkshire agreed to buy the firm for $9 billion on March 14.
Buffett, 80, has relied on Sokol as a manager and a dealmaker for more than a decade. The billionaire, who’s been planning his succession, is awaiting approval from regulators and shareholders for the Lubrizol deal. Enforcement lawyers at the U.S. Securities and Exchange Commission were reviewing Buffett’s statement and discussing the matter internally, according to one person with knowledge of the talks.
“The SEC is going look at that deal to check for insider buying and selling, so if there’s an issue the time to clean it up is now,” said Daniel Genter, president of RNC Genter Capital Management in Los Angeles, which oversees about $3.7 billion.
Berkshire Class B shares fell 3 percent to $82.90 in extended trading in New York after the announcement, and have risen about 6.7 percent this year. Sokol was chairman of Berkshire’s MidAmerican Energy Holdings and its roofing unit Johns Manville. He was also CEO of NetJets Inc., Berkshire’s luxury-flight subsidiary.
Share Purchases
Sokol bought 96,060 Lubrizol shares on Jan. 5, 6 and 7, less than two weeks before proposing that Berkshire buy the company, Buffett said. The purchases may have given him a profit of about $3 million, according to Buffett’s disclosure and data compiled by Bloomberg. Sokol’s compensation from MidAmerican totaled $59.5 million in the last five years, according to the unit’s SEC filings.
“It’s just a classic case of someone not fitting into that Buffett culture,” said Lawrence G. McDonald, president of McDonald Advisory Group in New York and author of “A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers” with Patrick Robinson. “That’s the type of thing you might do at another hedge fund, but you don’t do it at Berkshire.”
Buffett said in the statement that he thought Sokol’s stock purchases were legal. Sokol said he didn’t trade on inside information, according to a statement from Fox Business Network.
Buffett’s Interest
“I didn’t think Warren would be interested in buying Lubrizol anyway,” Fox Business Network cited Sokol as saying in an interview. “The only reason Warren Buffett mentioned it in the release is because it would have to be brought up anyway when Berkshire put the purchase up for a vote.”
Ann Thelen and Tina Potthoff, spokeswomen for MidAmerican, didn’t return calls and e-mails seeking comment from Sokol. Debbie Bosanek, an assistant to Buffett, confirmed his statement.
A surge in options trading in the week before the takeover suggests that investors may have been speculating with insider information, according to Ophir Gottlieb, head of client services at Livevol Inc., a San Francisco-based provider of options-market analytics. Call trading surged to 2,931 contracts on March 9, and open interest for the April $110 calls jumped to 2,654 from 41.
Sokol joined Omaha, Nebraska-based Berkshire in 2000 when he sold MidAmerican, which he led as CEO, to Buffett for about $9 billion. Under Berkshire, Sokol retained a minority equity stake in MidAmerican and expanded the unit by buying a natural gas pipeline and power producers in California and the U.K.
Scouting Acquisitions
Sokol relinquished the CEO position in 2008 and broadened his duties at Berkshire by scouting deals like an investment in China’s BYD Co. and a rescue package for Constellation Energy Group Inc.
“He was the heir apparent,” said David Kass, a professor at the University of Maryland’s Robert H. Smith School of Business. “The exercise of his recommending Lubrizol to Warren Buffett was like a CEO in training.”
Sokol instructed Citigroup Inc. (C) on Dec. 13 to arrange a meeting with Lubrizol CEO James Hambrick, according to an SEC filing last week. The two men spoke on the telephone on Jan. 14 and met on Jan. 25. Sokol told Buffett he was a shareholder in Lubrizol, the Wickliffe, Ohio-based maker of engine lubricants, when the two men first discussed a possible deal, according to the statement yesterday.
“It was a passing remark and I did not ask him about the date of his purchase or the extent of his holdings,” Buffett said. Buffett learned about the size and dates of the purchases “shortly before I left for Asia on March 19,” he said.
Shares Rise
Sokol’s stake as reported by Buffett would have been worth about $9.92 million on Jan. 7, based on the closing price on the New York Stock Exchange. The shares have risen about 30 percent to $134.01 since Buffett’s deal was announced, boosting the stake, if Sokol still owns it, to $12.9 million.
“I don’t attribute this to a failure of character or a scheme, but rather more of an honest oversight that happens in the hustle and the bustle of trying to get jobs done and the enthusiasm that comes about from a good idea,” Thomas Russo, a partner at Berkshire investor Gardner Russo & Gardner, said of Sokol’s trades. “There’s way too much at stake to risk for such small reward.”
Berkshire said in February it has four candidates to succeed Buffett as CEO, without publicly identifying them. Investors including Buffett biographer Andrew Kilpatrick had said Sokol was the most likely successor. On March 23, Buffett said at a news conference in India that Ajit Jain, Berkshire’s reinsurance head, would win the support of directors if he decided to seek the top job.
‘Totally Honorable’
“I really feel about him like I would a brother or a son,” Buffett said of Jain. “He’s not only excelled at every single task he’s taken on in insurance, but he’s behaved in a way that’s been totally honorable.”
Buffett said in the statement that he hadn’t asked for Sokol’s resignation and that it came as a surprise. Twice in years past Sokol had considered resigning and been persuaded to stay, Buffett said. Berkshire is “far more valuable today” because of Sokol’s service, Buffett said. Sokol said he will devote his career to investing his family’s resources and may start an enterprise, according to Buffett’s statement.
“There likely will be an investigation,” said Jacob Frenkel, an attorney at Shulman Rogers Gandal Pordy & Ecker in Potomac, Maryland, and a former SEC lawyer specializing in fraud and stock manipulation cases. “If all we have here are purchases before making a recommendation, and the decision to pursue an acquisition doesn’t commence until after the transactions are completed, that wouldn’t satisfy the definition of insider trading.”
To contact the reporter on this story: Andrew Frye in New York at afrye@bloomberg.net
To contact the editor responsible for this story: Dan Reichl at dreichl@bloomberg.net
彭博社：高盛CEO称古普塔违反了保密政策
腾讯财经讯 北京时间3月24日早间，彭博社头条刊文《高盛CEO称古普塔违反了保密政策》，现全文摘要如下：
高盛CEO贝兰克梵（Lloyd Blankfein）日前对陪审团表示，前高盛董事会成员古普塔（Rajat Gupta）违反了公司保密政策，向拉贾拉特南（Raj Rajaratnam）透露了高盛的利润额和战略计划。
检察官要求贝兰克梵就拉贾拉特南一案出庭作证。
帆船集团（Galleon Group）对冲基金共同创始人，53岁的拉贾拉特南正在美国曼哈顿联邦法庭受审，他被控从古普塔处获知高盛机密而进行内幕交易。
贝兰克梵作证称，古普塔知悉的机密信息包括，2008年10月巴菲特在高盛的50亿美元投资，高盛当季度的盈利预测，以及2008年6月下旬高盛有关收购一个商业银行或保险公司所进行的战略讨论。
检察官宣称古普塔将这些机密告知了拉贾拉特南，使其在2008年9月为帆船集团获利100万美元，并在下个月避免了数百万美元的损失。（��）
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花旗集团处境尴尬。花旗需要更多信息来决定被视为巴菲特头号接班 Sokol是否在路博润的交易上触犯了证券法律。此项交易让伯克希尔•哈撒韦花费了90亿美元。尽管如此，这并不意味着花旗一定会受到影响。
实际上，根据路博润交易的并购文件对事件全程的详细描述，可以看到花旗所做都是投行分内之事，即为有需求有意向的买卖双方牵桥搭线。作为伯克希尔•哈撒韦公司的交易人，Sokol去年曾向花旗问计，希望在各种行业内包括化工，进行“可能的交易。”
花旗给了答复：12月13日，花旗银行家提供了18家公司的名字，其中路博润已经被花旗列入 “战略性选择范畴”。Sokol对其很感兴趣，通过花旗要求与路博润总裁James L. Hambrick会谈。
至此，花旗做的一直很好。它联系到了Hambrick，并让事情顺利进展了下去。1月6日，路博润董事会面，就伯克希尔的兴趣进行了“深入而彻 底的讨论”，还聘请了顾问。之后不久，Sokol开始和Hambrick会谈，并同意1月25日在克利夫兰（Cleveland）见面。在那 儿，Sokol表明他有必要把谈论内容告知巴菲特，而后者敲定了这笔交易。
极富争议的是，推荐路博润的是花旗银行家——Paul Smith, Nathan Eldridge, Sara Schwerin 和Joe Sauvage，在此项交易中赚取了酬劳，原因是帮助一位认为其股票被低估的顾客解决了需求问题。麻烦是声称无过错的Sokol在与花旗会面后的第一天， 也就是实际开始交易的那天，以个人名义购买了路博润的股票。1月5、6、7日，Sokol再次买入股票，而6日正是路博润董事会面的时间。
除了要决定Sokol是否为交易中间人（因曾与花旗谈判），美国证券交易委员会（SEC）还必须回答一个基本问题：当索科尔做出这项1000万美元的交易时，他是否知道路博润董事会1月6日计划会面？如果花旗尚未就此接受SEC问询，他们最好做好准备。
罗布•考克斯于2000年在伦敦协助创建了Breakingviews。从2004年开始，负责公司在美国地区的扩张。在加入Breakingviews之前，罗布是彭博社的资深评论员。他毕业于美国哥伦比亚大学新闻学院和佛蒙特大学。
作者为路透Breakingviews专栏作家，本文仅为个人观点；更多独立评论和分析请访问breakingviews.reuters.com；Breakingviews专栏译文由财经网独自担责，中文版权归财经网独家使用（编译：闫桂花）
Breakingviews: Citigroup may hold key to whether Sokol did wrong
3/31/2011 COMMENTS (0)
NEW YORK, March 31 (Reuters Breakingviews) - Citigroup is in an uncomfortable spot. Its bankers may have information needed to determine whether the onetime successor to Berkshire Hathaway Chairman Warren Buffett violated securities laws when personally trading in shares of Lubrizol, which Berkshire acquired for $9 billion. While uncomfortable, this doesn't have to be damaging territory for Citi.
Indeed, merger documents detailing the sequence of events that led to the Lubrizol deal on March 14 show Citi doing what investment banks are supposed to do: matching hungry buyers with willing sellers. David Sokol, acting in some capacity as a dealmaker for Berkshire, asked Citi bankers last fall to come up with good ideas for "possible transactions" in a variety of industries, including chemicals.
Citi delivered: On Dec. 13, its bankers went over a list of 18 companies, including Lubrizol, which Citi had already been advising on "a range of strategic alternatives." Sokol found Lubrizol attractive and asked Citi to let the company's chief executive, James Hambrick, know he'd be interested in having a discussion.
So far, so good for Citi. It reached out to Hambrick and got the ball rolling. On Jan. 6 Lubrizol's board met and had an "extensive and thorough discussion" about Berkshire's interest and hired advisers. Shortly thereafter Sokol and Hambrick spoke, and agreed to meet on Jan. 25 in Cleveland, where Sokol made clear he'd need to hand off discussions to Buffett, who closed the deal.
All this is M&A 101. And, arguably, the Citi bankers who advised Lubrizol -- Paul Smith, Nathan Eldridge, Sara Schwerin and Joe Sauvage -- earned their fees for solving the needs of a client that felt its shares were underappreciated. Trouble is, Sokol, who says he did nothing wrong, bought shares in Lubrizol the day after the Dec. 13 meeting with Citi at which he effectively kicked off the deal. He did so again on Jan. 5, Jan. 6 and Jan. 7 -- or before, during and after Lubrizol's board meeting.
Apart from deciding whether Sokol's conversations with Citi made him an insider, the SEC must answer a basic question. Did Sokol know the board was meeting on Jan. 6 when he placed his $10 million trade? Again, going back to the M&A textbook, it wouldn't have been out of the ordinary for Citi to have informed Sokol that Lubrizol's board was meeting. If Citi's bankers haven't heard from the SEC yet on this conundrum, they'd better prepare.
CONTEXT NEWS
-- Warren Buffett said he accepted the resignation of David Sokol, one of the executives widely considered as a successor to the Berkshire Hathaway chairman. Sokol was the chief executive of NetJets, the company's private airplane leasing company, and chaired MidAmerican Energy Holdings, the company's utility business.
-- Buffett said Sokol expressed a desire to "utilize the time remaining in my career to invest my family's resources in such a way as to create enduring equity value and hopefully an enterprise which will provide opportunity for my descendents and funding for my philanthropic interests."
-- He also said Sokol had purchased shares in Lubrizol, the company Berkshire recently acquired for $9 billion, before recommending that Buffett consider the industrial lubricants company as a possible takeover target.
-- Buffett wrote: "That brings us to our second set of facts. In our first talk about Lubrizol, Dave mentioned that he owned stock in the company. It was a passing remark and I did not ask him about the date of his purchase or the extent of his holdings."
-- Buffett concluded: "Neither Dave nor I feel his Lubrizol purchases were in any way unlawful. He has told me that they were not a factor in his decision to resign."
(By Rob Cox, a Reuters Breakingviews columnist. The opinions expressed are his own)
Goldman’s Blankfein Testifies Gupta Violated Firm’s Policies
Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs Group Inc. Photographer: Joshua Roberts/Bloomberg
March 23 (Bloomberg) -- Mark Rifkin, partner at Wolf Haldenstein Adler Freeman & Herz LLP, talks about the insider-trading trial of Galleon Group LLC co-founder Raj Rajaratnam and the implications for Goldman Sachs Group Inc. and the hedge fund industry. Goldman Sachs Chief Executive Officer Lloyd Blankfein testified that former Goldman board member Rajat Gupta violated the firm’s confidentiality policies by allegedly telling Rajaratnam about the firm’s earnings and strategic plans. Rifkin speaks with Mark Crumpton on Bloomberg Television's "Bottom Line." (Source: Bloomberg)
March 23 (Bloomberg) -- Seth Berenzweig, managing partner at Berenzweig Leonard, talks about the testimony of Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein at the criminal trial of Galleon Group LLC co-founder Raj Rajaratnam. He speaks with Margaret Brennan on Bloomberg Television's "InBusiness." (Source: Bloomberg)
March 23 (Bloomberg) -- William Cohan, author of "House of Cards" and a Bloomberg Television contributing editor, talks about Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein being called by U.S. prosecutors to testify as a government witness at the insider-trading trial of Galleon Group LLC co-founder Raj Rajaratnam. Cohan speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
March 24 (Bloomberg) -- Lloyd Blankfein, chief executive officer of Goldman Sachs Group, told a jury yesterday that former Goldman board member Rajat Gupta violated the firm’s confidentiality policies by allegedly telling Raj Rajaratnam about the firm’s earnings and strategic plans. Prosecutors called Blankfein to the stand to help build their case that Rajaratnam, the Galleon Group LLC hedge fund co-founder, traded on inside information about Goldman Sachs he obtained from Gupta. Bloomberg's Jon Erlichman reports. (Source: Bloomberg)
Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc. (GS), told a jury that former Goldman board member Rajat Gupta violated the firm’s confidentiality policies by allegedly telling Raj Rajaratnam about the firm’s earnings and strategic plans.
Prosecutors called Blankfein to the stand to help build their case that Rajaratnam, the Galleon Group LLC hedge fund co- founder, traded on inside information about Goldman Sachs he obtained from Gupta. Rajaratnam, 53, is being tried in federal court in Manhattan on insider trading charges.
Blankfein testified that Gupta had confidential information about Warren Buffett’s $5 billion investment in Goldman Sachs in October 2008, Goldman’s earnings projections for that quarter and strategic discussions the firm had about acquiring a commercial bank or insurance company in late June 2008. Prosecutors allege that Gupta passed the tips to Rajaratnam, allowing him to make about $1 million for Galleon in September 2008 and avoid millions in losses the next month.
“We are a public company,” Blankfein said. “We don’t want information about our company to get outside before the time is appropriate. There is a process and a protocol for speaking to the outside world.”
Largest Crackdown
Rajaratnam is in the third week of his trial in the largest crackdown on hedge-fund insider trading in U.S. history. The Sri Lankan-born money manager is accused of making $45 million from tips leaked by corporate insiders and hedge fund traders. He denies wrongdoing, saying he based his trades on research.
In addition to the Goldman Sachs tips, prosecutors claim Gupta gave Rajaratnam information on quarterly earnings and financial results for Procter & Gamble Co., where Gupta was also a director.
Blankfein told jurors that Gupta and other board members were told in October 2008 that Goldman was facing the possibility of a quarterly loss for the first time since it went public in 1999.
He said that Goldman Sachs’s quarterly net revenue is typically “$9 billion to $10 billion.” At the time, when analysts wrongly believed Goldman was making a profit, it was running a $171 million loss so far in the quarter.
“I’d round it to about flat,” Blankfein said.
Prosecutors have alleged that in October 2008, Gupta tipped Rajaratnam, who sold off all of the fund’s entire position in Goldman and “saved Galleon millions in losses.”
Secretly Recorded Call
For a second time in the trial, which began March 8, jurors heard a July 29, 2008, telephone call, secretly recorded by the FBI, in which Gupta told Rajaratnam that the Goldman board had discussed acquiring a commercial bank or an insurance company.
“Have you heard anything along that line?” Rajaratnam asked Gupta during the call.
“Yeah,” Gupta replied, “This was a big discussion at the board meeting.”
Special Assistant Manhattan U.S. Attorney Andrew Michaelson, asked Blankfein about Goldman’s policy on board meetings.
“At the time were Goldman Sachs board members authorized to confirm or deny rumors?” Michaelson asked Blankfein.
“No,” Blankfein said.
“At the time was Rajat Gupta authorized to confirm or deny rumors about Goldman Sachs?” Michaelson asked.
“No,” Blankfein said.
Goldman Sachs Policies
“In this telephone call, did Rajat Gupta violate Goldman Sachs policies?” Michaelson asked.
“Yes,” Blankfein said.
When he took the stand at 10:20 a.m. today, Blankfein entered the courtroom, smiling broadly. He was called out of turn by the government because he will be outside the U.S. next week, Assistant Manhattan U.S. Attorney Reed Brodsky told U.S. District Judge Richard Holwell. Blankfein testified for more than 3 1/2 hours before leaving the stand at about 2:50 p.m.
During a break in court proceedings, Blankfein stood, smiled, rested his right arm against the jury box and looked in the direction of Rajaratnam. The defendant, who was seated in a chair behind the defense table, stared straight ahead.
‘Important Contributions’
On cross-examination that lasted about an hour, John Dowd, Rajaratnam’s lawyer, questioned Blankfein about a Goldman Sachs press release announcing that Gupta wouldn’t stand for re- election as a board member in March 2010. Dowd asked Blankfein to read the announcement aloud to the jury.
In the release, Blankfein praised Gupta’s “important contributions to Goldman Sachs as a board member.”
Dowd asked whether, at the time he issued the statement, he was aware of the government’s allegations against Gupta.
“I had an awareness of some -- I want to say I had an inkling, subsequently I had more awareness,” he testified. “I knew there were questions about Rajat’s behavior, that’s how I would say it.”
At a sidebar conference in court, Dowd said that Blankfein “had a conversation with Gupta when this matter broke in the press” about a year ago “and asked him about it.”
“I wouldn’t have had anything to do with that,” Gupta replied, according to Dowd.
Blankfein agreed with Dowd that Galleon was an important client of Goldman Sachs and that he had visited the firm “a long time ago.”
Dowd showed Blankfein news articles suggesting that rumors that Goldman considered buying a commercial bank -- possibly Wachovia Corp. -- were being discussed in public. He asked Blankfein if the confidentiality of information depends on what kind of information it is.
‘Public Topic’
“The board’s reaction, even to a public topic, would be confidential,” he said, “because it emanates from the board.”
Dowd sought to show that information that the prosecutors claimed to have come from a Goldman Sachs board meeting hadn’t emanated from the meeting.
After Blankfein testified that his board had discussed a possible acquisition of Wachovia orAmerican International Group Inc. (AIG), Dowd confronted him with board minutes, pointing out that there was no mention of such discussions.
Blankfein disagreed, noting that a reference to a “strategic review” covered the subject.
Before Blankfein’s testimony today, Dowd said he may recall the Goldman Sachs chief later in the trial as a witness for the defense, telling the judge, “We’re not happy with the way the government has proceeded,” Dowd said, adding, “It’s outrageous.”
TARP Money
Blankfein described for the jury the discussions within Goldman Sachs management during the credit crisis of September 2008. The news that Buffett was going to invest money in Goldman Sachs meant a boost to the firm at a critical time, he said.
“We had $5 billion in cash that we didn’t have before, a significant amount of money,” he said. Investors “were likely to think we were in better shape as a result of this.”
Blankfein drew laughter from the courtroom audience when Michaelson asked him if Goldman Sachs getting $10 billion from the Troubled Assets Relief Program helped the firm. He said TARP funds weren’t available at the time Buffett made his investment.
“TARP was a bigger amount on better terms,” he said. “The government didn’t charge nearly as much money as Warren Buffett did,” Blankfein said, referring to the interest Berkshire charged.
Michaelson asked whether Goldman Sachs have sought Buffett’s money if TARP had been available earlier.
“Probably not,” Blankfein said. “If we knew the government was going to turn around and put money into banks, we probably wouldn’t have gone out and looked for investors,” he said. “In other words, we weren’t waiting or expecting the government to do that.”
Morgan Stanley Banker
After Blankfein’s testimony, prosecutors called Owen O’Keeffe, a Morgan Stanley investment banker. O’Keeffe testified about information that was available to Kamal Ahmed, a Morgan Stanley managing director, about several deals the bank worked on, including the 2006 purchase of ATI Technologies Inc. by Advanced Micro Devices Inc. (AMD) Prosecutors claim Rajaratnam traded on insider information that originated from Morgan Stanley.
Ahmed’s lawyer, Douglas Tween, said his client has been placed on administrative leave and is cooperating with the bank’s investigation. Ahmed hasn’t been charged or sued in connection with the government’s allegations, he said.
“We remain confident he did nothing illegal or improper,” Tween said.
Pen Pendleton, a Morgan Stanley spokesman, declined to comment on the matter.
Prosecutors questioned former Intel executive Rajiv Goel for about 45 minutes this morning, then interrupted Goel’s testimony to question Blankfein. Goel is scheduled to resume his testimony tomorrow.
The case is U.S. v. Rajaratnam, 1:09-cr-01184, U.S. District Court, Southern District of New York(Manhattan).
To contact the reporters on this story: David Glovin in Manhattan federal court atglovin@bloomberg.net; Patricia Hurtado in Manhattan federal court at phurtado@bloomberg.net; Bob Van Voris in Manhattan federal court at rvanvoris@bloomberg.net.
To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.
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